Amazon Web Services says it's making a big hiring push for sales and marketing as its growth continues to slow (AMZN, MSFT)

Amazon Web Services CEO Andy Jassy

Amazon is investing more in marketing and salespeople "to handle a wider group of customers," Chief Financial Officer Brian Olsavsky said in its quarterly earnings call on Thursday.
Amazon Web Services started out primarily selling to startups, while Microsoft knows the enterprise business well. Hiring enterprise sales and marketing people can help AWS maintain its dominance of the enterprise market.
Amazon added nearly 100,000 employees in the third quarter alone, bringing the Seattle-based company's workforce to 750,000 total. Most of the new hires are in fulfillment and transportation as Amazon expands one-day shipping ahead of the holiday season.
Amazon reported less-than-expected profit in third-quarter earnings on Thursday — $4.23 per share on revenue of $70 billion. AWS raked in $9 billion in revenue for the quarter, and was responsible for nearly 72 percent of Amazon's total operating income over the period.
Tech industry analyst Patrick Moorhead said Amazon's $2.3 billion in cloud sales growth for the quarter is "larger than the size of most cloud company's revenue" and chalked its revenue growth decline up to the "law of large numbers."
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Amazon Web Services is hiring more sales and marketing people, as the dominant cloud computing business fends off challengers including Microsoft, the Seattle-based company disclosed Thursday.

Amazon overall added nearly 100,000 employees in the third quarter alone, growing its workforce to 750,000 people. Brian Olsavsky, Amazon's chief financial officer, said during a call to investors after Amazon reported third-quarter earnings, said that the biggest driver of the hiring was adding people for fulfillment and transportation roles as Amazon tries to expand one-day shipping. Amazon expects the move will cost $1.5 billion in the next quarter.

However, Olsavsky separately identified AWS sales and marketing as a major hiring priority for the company in the year to come.

"We are investing a lot more this year in salesforce and marketing personnel mainly to handle a wider group of customers, an increasingly wide group of products – we continue to add thousands of products and features a year – and we continue to expand geographically," Olsavsky said of AWS.

Amazon Web Services started off primarily selling to startups. Microsoft, meanwhile, has a long history of selling to large enterprise companies. Investing in enterprise sales and marketing people, as Olsavsky said Amazon is doing, could help the company maintain its dominance over Microsoft and others.

Amazon's new sales and marketing hires are "especially for the enterprise market," Olsavsky said.

Amazon Web Services declined to disclose how many of Amazon's 750,000 employees work in AWS. For a ballpark figure, more than 45,000 LinkedIn users list AWS as their current employer, though those profiles aren't always accurate.

Amazon on Thursday reported earnings of $4.23 per share on revenue of $70 billion. Profit was less than Wall Street expected, sending Amazon stock down as much as 8.62% in after-hours immediately following the release. Amazon stock closed up 1% to about $1,780 per share in regular trading Thursday.

AWS is a big driver of profit for Amazon. AWS revenue reached $9 billion in the third quarter. AWS was responsible for nearly 72% of Amazon's nearly $3.2 billion in operating income in the third quarter.

But AWS' revenue growth continued to slow in the third quarter, dropping to 35% from 37% last quarter, continuing a pattern of slowing revenue growth.

Analyst Patrick Moorhead of Moor Insights and Strategy said that the percentage points don't tell the whole story for AWS, however. Last year, AWS pulled in $6.7 billion in revenue in the third quarter — meaning that it grew by $2.3 billion in 12 short months.

That $2.3 billion figure is "larger than the size of most cloud company's revenue," analyst Patrick Moorhead of Moor Insights and Strategy said. He chalked the revenue growth decline up to the "law of large numbers," meaning that it's simply harder to maintain impressive growth figures when the base is already so impressive.

Amazon isn't alone in facing that particular problem, it should be noted.

When Microsoft announced its own quarterly earnings release earlier this week, the company said that revenue growth of its Microsoft Azure cloud platform slowed too, down to 59 percent from 64 percent last year.

Experts seemed mostly similarly unfazed by that drop and said Microsoft's Azure cloud business has an opportunity to close the gap with Amazon Web Services as more customers seek a hybrid cloud, which is basically a mix of on-premises and public-cloud resources.

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